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Posted by on Apr 27, 2015 in Ethics, Health care, Neurology, Pharma

Astronomical MS Drug Costs: Is Pharma Price Fixing to Blame?

Astronomical MS Drug Costs: Is Pharma Price Fixing to Blame?

Money_source.jpgThe annual costs of disease-modifying therapies (DMTs) for multiple sclerosis (MS) have increased at ridiculous rates over the last 2 decades, according to a new study from investigators at Oregon State University (open access at Neurology). These cost increases have not only far outpaced the rate of inflation; they have surpassed the inexplicable rise in tuition rates for higher education in the United States. Now that’s alarming.

The study authors, Hartung et al, provide a shocking graph of the rising costs of DMTs (Figure 1)—which might have reasonably used a logarithmic scale to accommodate the escalating numbers. These cost increases not only affect the more recently introduced, novel compounds (like fingolimod)—but they apply to the originally introduced DMTs in the mid-90s. Among the latter group are the steadfast options of interferon beta-1b (Betaseron; Bayer), glatiramer acetate (Copaxone; Teva), and interferon beta-1a IM (Avonex; Biogen), which were first offered at annual costs of $11,532, $8,292, and $8,723, respectively. And while these annual costs were pretty shocking at the time, they are nothing compared to the respective 2013 asking prices of $61,529 (>400% increase), $59,158 (>600% increase), and $62,394 (>600% increase).

Hartung et al identify market milestones along the way, which coincide with some price jack-ups of existing drugs—including new arrivals interferon beta-1a SQ (Rebif; EMD Serono) in 2002, natalizumab (Tysabri; Biogen) in 2004, and fingolimod (Gilenya; Novartis) in 2010. But this is clearly not the entire story, and the authors are at a loss to identify any reasonable explanations for the price hikes, particularly because “[p]harmaceutical pricing and purchasing is complex and one of the least transparent transactions in health care.”

Adding to the head-scratching, Hartung et al discovered less out-of-control price increases for another class of DMTs (TNF inhibitors) in the United States, as well as more temperate increases for MS DMTs within the VA system and in other nations. Notably the VA and other countries with nationalized healthcare systems can negotiate drug prices with industry, unlike the US Medicare and Medicaid systems (which are legally prevented from doing so). But MS DMTs aren’t sole outliers when it comes to astonishing increases in drug prices. There have been “rapid and coordinated rises in unit prices for drugs used to treat hemophilia,” the authors note.

The sticker shock is expected to continue for brand name MS DMTs, because of the difficulties of producing acceptable, lower-priced generic biosimilars of off-patent molecules.

Hartung et al speculate,

Government-issued patent monopolies, third-party payers, lack of reimbursement transparency, and imperfect clinical information all contribute to a seemingly dysfunctional marketplace where expanded choice has led to higher, rather than lower, prices. Some argue that recent trends in industry pricing suggest collusive behavior between manufacturers [emphasis added], although this is challenging to prove with price data alone.

In their article subhead, the authors ask whether the pharmaceutical industry is “too big to fail?” The question alludes to the continued toleration or outright support of a vast, interconnected economic system (like the US banking system). They conclude,

[T]he unbridled rise in the cost of MS drugs has resulted in large profit margins and the creation of an industry “too big to fail.” It is time for neurologists to begin a national conversation about unsustainable and suffocating drug costs for people with MS—otherwise we are failing our patients and society.

I would argue that the too-big-to-fail question is (fortunately) misplaced in this context and does not apply to the relatively small marketplace of MS DMTs. Certainly it does not rival the economies of Goldman Sachs or Bank of America.* But it is insufficient for neurologists to merely be concerned or “begin a national conversation” about MS drug prices. They must act, as Murray and Brown write in an accompanying editorial.

Yet how neurologists might act remains unanswered.

* And maybe MS DMT marketplace has already failed, by the sheer fact that the costs of MS DMTs have outstripped their effectiveness.
bmartin (1130 Posts)

A native East Tennessean, Barbara Martin is a formerly practicing, board-certified neurologist who received her BS (psychology, summa cum laude) and MD from Duke University before completing her postgraduate training (internship, residency, fellowship) at the Hospital of the University of Pennsylvania in Philadelphia. She has worked in academia, private practice, medical publishing, drug market research, and continuing medical education (CME). For the last 3 years, she has worked in a freelance capacity as a medical writer, analyst, and consultant. Follow Dr. Barbara Martin on and Twitter.